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An Epicor White PaperImprove Scheduling,Production, and QualityUsing Cloud ERP

Improve Scheduling Production and Quality Using Cloud ERPBest Practices forDiscrete ManufacturersThese days, ERP systems are designed to manage many types of manufacturingmethods; but for this discussion, we will concentrate on discrete manufacturing,which is typically used for low-volume, job-based production. By way of contrast,inventory-based manufacturing is typically used for high-volume production. Table1 summarizes the process steps for both types of manufacturing.Inventory based manufacturingHansen notes that most of the process steps for inventory-based manufacturing(i.e., quoting, producing, and shipping), producing, and shipping, require simplychecking inventory, whether for raw materials, components, or finished goods.She outlines the manufacturing process steps as follows: Quoting a customer on a particular manufacturing job involves checking to seeif materials are available in inventory or whether they need to be ordered, whichmay affect both pricing and delivery times. An order will require a similar check of inventory, and may need materials to bepurchased for inventory. Once the materials are received, they must be enteredinto inventory before production can proceed. Once production begins, material is issued from inventory to be used inmanufacturing; as production proceeds, finished goods are placed back intoinventory. When production is complete, finished goods are taken from inventory to beshipped to the customer.Table 1: Comparison of Inventory-Based and Discrete ManufacturingProcess ingQuoting or OrderingMaintain items ininventory“Parts-on-the-fly“Purchasing forProductionReceive items toinventoryPurchase direct toinventoryIssue inventory toproductionReceive directly toproductionReceive productionoutput to inventoryAccurate work-inprogress (WIP)Ship from inventoryShip directly from WIPProductionShippingSource: Epicor Software Corporation2

Improve Scheduling Production and Quality Using Cloud ERPDiscrete manufacturing“Most of ourcustomers will usea mix of the twoapproaches. Epicoroffers both methods,which allows ourcustomers theflexibility to basethe method on theircurrent productionneeds.”Christine Hansen,product marketing managerEpicor Software CorporationAccording to Hansen, Epicor ERP is particularly suited to discrete manufacturingbecause of the reductions in work enabled by features of the software, including: Parts-on-the-fly: a feature of the Epicor system allows a company to estimate,accept an order, produce, and ship products without the need to consultinventory If material needs to be purchased for an order, it can be bought directlyinto inventory; the system makes the appropriate inventory transactionsautomatically. In addition, items on the purchase order are tagged with anassociated job number, eliminating the need for suppliers to tag materials Material purchased from suppliers can be received into production because thesystem has already tagged the material with the correct job number; productionis also notified of its receipt, saving additional time and eliminating potentialconfusion Finished goods can be shipped directly from work-in-progress (WIP), rather thanfrom inventoryManaging production processesMany companies struggle with the need to strike a balance between how productcosts are determined and how products are scheduled. Certain data is recordedregarding how a product is manufacturingd based on costs, such as: Labor costs associated with manufacturing the productMaterial costs to build the productOverhead or burden costs allocated with the productSubcontracting or outsourcing costs for components or sub-assemblies that areeventually incorporated in the finished productAgainst these product costs are those associated with scheduling production,which include: Production setup time, labor, and machine idle timeThe amount of time required to manufacturing the productOutsourcing or subcontracting lead times, if anyLead times for materials required for production so that they arrive just in timefor productionThe combination of these two manufacturing elements is called the method ofmanufacturing (MOM). In essence, the MOM is a manufacturing roadmap thatincludes the Bill of Materials (BOM) and the Bill of Operations (BOO).Figure 1, found on the next page, depicts the balance between thesemanufacturing elements, as well as the factors that comprise costing andscheduling.3

Improve Scheduling Production and Quality Using Cloud ERP“I can pull a mastermethod fromThe method of manufacturing is sometimes called the master method ofmanufacturing and is maintained by engineering, although all parts of theorganization concerned with the manufacturing processes should be able to use it.Figure 1: Method of Manufacturingengineering to makemy initial quotation,and then make anyoperational or stepchanges within thequote. This savesme the time tobuild a method ofmanufacturing fromscratch every time.”Christine Hansen,product marketing managerEpicor Software CorporationSource: Epicor Software CorporationUsing the method of manufacturingOne common use for the method of manufacturing is to make it easier toprepare a quotation for a product to be manufacturingd. The master method ofmanufacturing contains all the details associated with manufacturing a product, soit can be used as a template for similar products. The Epicor standard practice is tohave the system store the method of manufacturing in several repositories: withthe quotation, with the job, and within the master engineering repository.4

Improve Scheduling Production and Quality Using Cloud ERPFigure 2: Using the Method of ManufacturingSource: Epicor Software CorporationAnother use for the method of manufacturing is to provide a production historyfor a product, highlighting the differences between how the manufacturing of aproduct was planned and how it was actually produced.Because the method of manufacturing also stores the complete history of revisionsfor a product, it is possible to see changes as they occur within the entire lifecycleof a manufacturingd product. The history of changes for production providesvaluable insight into how engineering can improve a product’s manufacturabilityand gives production ways to increase the overall efficiency of operations.5

Improve Scheduling Production and Quality Using Cloud ERPTop Practices for a Top-PerformingProduction FloorHansen lists three areas where best practices help top-performing manufacturersconcentrate their efforts: Production planning and scheduling Production management QualityLet’s take a closer at look at these areas.Production planning and schedulingOne of the first steps in the production day is to plan what products need to beproduced to satisfy existing orders, and to schedule production for them. Topperforming manufacturers concentrate on four practices to maximize production: Define existing capacity for production. A realistic assessment ofproduction capacity includes factors such as the availability of machine time, theflexibility of the various types of machines for different tasks, and the availabilityof skilled labor within the organization. Improve accuracy of production scheduling. The master method ofmanufacturing provides a way for companies to continuously refine bothmanufacturing processes and the time allocated to them. For example, the loadtime (the amount of time it takes for production) could be stored for each joboperation, and recalled to improve scheduling accuracy for future quotations aswell as for production. Use technology to enhance production control. An accurate scheduleshould be available not only to those in production planning, but also to peopleon the shop floor who may be actively managing or producing product. An ERPsystem has these capabilities and is flexible enough to accommodate changes. Communicate the schedule to all stakeholders in the organization.The availability of schedules online means that anyone connected to themanufacturing process has accurate, up-to-date information to make goodproduction decisions.A compelling case for cloud deployed Epicor ERP is the ease with which clouddeployment makes key workflows available across the enterprise—and the globalsupply chain. Because nothing more than an Internet connected PC, tablet, orsmart phone is required, cloud deployment is the most effective way to bringaccessibility and integration to most organizations.“Maybe the schedule we laid out is perfect, but how often does it stay that way?”asks Hansen. “An ERP system can help to increase our overall manufacturingflexibility and efficiency. And with cloud deployment, everyone across theorganization—from procurement to sales to field services staff—are kept in theloop of any changes to critical delivery dates and schedules.”6

Improve Scheduling Production and Quality Using Cloud ERPProduction managementAnother area of focus for top manufacturers is the production managementprocess. Hansen identifies four tasks in the process: Execute the production plan according to the schedule established earlier. Theprocess should be the same whether it calls for a single day or a week’s worthof production. Manage changes in production in a proactive way to minimize the impact ofchanges on the overall schedule. Increase the visibility of the entire production process so that the productionschedule, materials management, current production operations, and quality areavailable to the organization. Close the finished job. Many manufacturers miss this opportunity to implementcontinuous process improvement. The ability to compare expected costs andlabor against actual results is critical to driving the organization toward moreefficient manufacturing processes.All these tasks are made easier by using a cloud deployed ERP system, especiallyone that provides an end-to-end of the manufacturing process. “The ability toupdate and refine your manufacturing methods will make them that much smarterfor the next job,” says Hansen. “Smarter, more efficient methods mean increasedprofitability.”QualityA final area where top-performing manufacturers excel is in maintaining qualitythroughout the production process. They do this by instilling quality principlesthroughout the organization: Tracking quality incidents in a systematic way on a regular basis, beginning withthe production floor Identifying the root cause of a quality problem so that quality issues can beavoided in the future Making quality in the production cycle an organizational objective“How powerful would it be if your customer service could communicate ananalysis of production quality for an order?” asks Hansen. “Not only buildinga quality product, but being able to quickly respond with evidence developsconfidence in your manufacturing capability and process.”7